Feb. 20 (Bloomberg) -- Iridium, the rarest of the seven
precious metals traded internationally, is showing signs of life
as economic growth fuels demand for the commodity used in spark
plugs and light-emitting diodes for televisions.

After plunging 62 percent last year, the biggest slump
since 2002, iridium rose 21 percent since the end of December to
a three-month high of $485 an ounce yesterday, Johnson Matthey
Plc data show. Prices remain 55 percent below a 2011 record.
There’s been “good buying” from industrial users, and prices
should keep rising in the “near future,” Heraeus Metals
Germany GmbH & Co. said in a report e-mailed Feb. 17.

The least-abundant precious metal in the earth’s crust is
also found in asteroids, including one that scientists say
crashed about 65 million years ago and caused the extinction of
the dinosaurs. The metal is so resistant to corrosion that it
was alloyed with platinum in 1889 to make the kilogram bar used
as the international standard of mass and stored at the Bureau
International des Poids et Mesures near Paris.

“What we’ve seen in the first few months of 2014 is that
some consumers have taken advantage of the fairly low price,”
said Mark Bedford, managing director for precious metals at
Johnson Matthey in Royston, England. “In a relatively thin
market, that amount of buying interest is going to move the
price up.”

Top Metal

Iridium’s rebound this year is the biggest among precious
metals, after most plunged in 2013 as investors shunned them as
a store of value. Gold, which dropped 28 percent last year, the
most since 1981, is up 9.2 percent in 2014 on renewed demand for
a haven amid signs the U.S. economy isn’t recovering in line
with expectations. Silver advanced 11 percent, platinum
increased 3.2 percent, and palladium rose 2.7 percent. Ruthenium
climbed 14 percent and rhodium jumped 11 percent to an eight-month high of $1,085 an ounce, Johnson Matthey data show.

The Standard & Poor’s GSCI gauge of 24 commodities gained
2.9 percent, led by double-digit gains in coffee and natural
gas, while the MSCI All-Country World Index of equities lost 1.3
percent. The Bloomberg U.S. Treasury Bond Index increased 1.6
percent.

Iridium is mined alongside other metals and about 60
percent of global output comes from South Africa, according to
the U.S. Geological Survey. More than 70,000 workers have been
on strike over wages since Jan. 23 in the country, the largest
platinum producer.

Asteroid Impact

An “anomalously high concentration” of iridium occurs in
a thin layer of clay that was deposited at the end of the
Cretaceous period, when dinosaurs are said to have become
extinct, the U.S. Geological Survey says. That metal is thought
to have originated from an asteroid or comet that hit the earth
and formed an ash cloud that blocked out sunlight, the U.S.
Interior Department agency said.

The metal is used in spark plugs, which ignite compressed
fuel or air by sending electrical current from ignition systems
to combustion chambers. Iridium is found in crucibles to grow
crystals that the electronics industry needs for LED lighting
and used by chemical companies for chlorine production. It’s
also been used in fountain-pen tips.

An alloy of 10 percent iridium and 90 percent platinum was
used to make the international prototype of the kilogram (32
ounces) that’s held by the BIPM in Sevres, France.

Oversupplied

Prices declined in 2012 and 2013, touching $400 in
December, the lowest since February 2007, in part because the
metal was oversupplied, Johnson Matthey said in November. The
company, which makes about one in three of the world’s catalytic
converters, doesn’t provide figures on supply.

“The price came down quite a long way last year,” after
touching a high of $1,085 in September 2011, Bedford said.
“It’s industrial buying. They quite like the price at this
level and have taken the opportunity to lock in.”

Precious metals also have gotten a boost from U.S. reports
since last week showing New York manufacturing data trailed
estimates and factory output fell. Concern the recovery is
weakening pushed the Bloomberg Dollar Spot Index to a two-month
low this week. Expansion in China, the biggest user of
industrial metals, will slow to 7.5 percent this year, the least
since 1990, economist estimates compiled by Bloomberg show.

Iridium is mostly bought by industrial users, and
speculative holdings are more limited than for other larger
precious-metals markets. While investors can buy gold, silver,
platinum, palladium and rhodium through physically-backed
exchange-traded products, no such funds exist for iridium. Those
wishing to hold a position would have to buy through an account
with a broker.

Estimated Supply

While most mining companies don’t report how much iridium
they produce, output is estimated from about 129,000 ounces to
322,000 ounces each year, the U.S. Geological Survey said.
Johnson Matthey said in November that iridium demand probably
rose 2.1 percent to 198,000 ounces last year.

The electrochemical industry accounted for 30 percent of
iridium demand last year, with electrical companies buying 18
percent of the metal and chemical usage making up 10 percent,
according to Johnson Matthey. Total consumption was as much as
338,000 ounces in 2010, it estimates. Demand is increasing on
higher sales of gasoline-powered cars, the company said.

Car Sales

European car sales gained 5.2 percent in January, rising
for a fifth consecutive month, the Brussels-based European
Automobile Manufacturers Association said Feb. 18. Sales of cars
and light commercial vehicles will rise 5 percent to a record
88.4 million units this year and gain another 5.4 percent in
2015, estimates LMC Automotive Ltd., a research company in
Oxford, England.

Global economic expansion will accelerate to 2.9 percent
this year, from 2 percent in 2013, according to economist
estimates compiled by Bloomberg. Iridium more than doubled in
the two years through 2011, when the world economy grew by at
least 3 percent.

“Although it’s a very niche metal, it does have a pretty
wide range of applications,” said Ross Norman, chief executive
officer of Sharps Pixley Ltd., a brokerage handling physical
bullion in London. “Perhaps some uptick in demand could be
related to greater industrial output, but I suspect that there
would be one application in particular that would be driving the
price.”